|ENTERPRISE PRODUCTS PARTNERS L P filed this Form 10-K on 02/28/2018|
While this period of very low prices has been very difficult for producers, the lower energy prices have led to an increase in energy consumption by consumers, particularly for motor fuels, and by energy intensive industries (e.g., steel manufacturing and petrochemicals) as lower energy and feedstock costs reduce operating costs for their businesses making them more globally competitive. We believe that the ongoing production freeze by OPEC and Russia coupled with an increase in demand for crude oil, natural gas and NGLs from these types of industries, will continue to balance crude oil supply and demand fundamentals and further reduce the overhang of global inventories in 2018. Regardless of such market dynamics, almost all of the major assets we have under construction or have recently completed, whether supply or demand oriented, are supported by long-term fee-based commitments from producers, shippers and/or end-use customers. We also believe that as a result of the price downturn which has slowed and/or caused many higher-risk, long-lead time upstream projects to be cancelled, U.S. unconventional resources have gained substantial long-term significance worldwide and that the U.S. is going to continue to grow in significance as a supplier of hydrocarbons to other nations, particularly in Latin America, Europe and Asia.
Debt and equity capital markets for the energy sector remained turbulent throughout 2017 as continued volatility and weakness in commodity prices created market uncertainty. This has generally impacted both our cost of capital and access to debt and equity capital markets.
While there were challenges in the capital markets during 2017, we were able to access both the debt and equity capital markets to support our growth and balance sheet objectives at acceptable costs. At December 31, 2017, we had $3.75 billion of consolidated liquidity, which was comprised of $3.74 billion of available borrowing capacity under EPO’s revolving credit facilities and $5.1 million of unrestricted cash on hand. Based on current market conditions (as of the filing date of this annual report), we believe we will have sufficient liquidity, cash flow from operations, and access to capital markets and bank capital to fund our capital expenditures and working capital needs for the reasonably foreseeable future.
In February 2018, we issued $2.7 billion aggregate principal amount of senior notes and junior subordinated notes and used the net proceeds therefrom for the temporary repayment of amounts outstanding under our commercial paper program and for the expected redemption of our Junior Subordinated Notes B. For information regarding these debt offerings, see “Significant Recent Developments” within this Item 7.
We have two series of senior notes maturing in April and May of 2018 that have a combined principal amount of $1.1 billion. We expect to refinance these senior notes at or near their maturity. After that, our next maturing series of senior notes are due in January and October of 2019 in the aggregate principal amount of $1.5 billion.
The U.S. government is expected to continue to run substantial annual budget deficits in the coming years that will require a corresponding issuance of debt by the U.S. Treasury. The interest rate on U.S. Treasury debt has a direct impact on the cost of our debt. At this time, we are uncertain what impact the expected large issuances of U.S. Treasury debt and the prevailing economic and capital market conditions during these future periods will have on the cost and availability of capital. We continue to monitor and evaluate the condition of the capital markets and our interest rate risk with respect to funding our capital spending program and refinancing upcoming maturities. For information regarding our interest rate hedging activities, see Note 14 of the Notes to Consolidated Financial Statements included under Part II, Item 8 of this annual report.